Updates: The article has been edited to indicate that Coupay is currently raising its seed round instead of the earlier reported news of having closed a seed round investment.
Coupay, has just announced that they are raising a seed round of US$500,000. The investment round sees the participation of Ross Veitch and Craig Hewett, co-founders of Singapore-based travel metasearch site WEGO. Other than that, Nick Gundry, co-founder of recently acquired travelmob has also joined in Coupay’s first round of financing. All three investors will joined Coupay’s advisory board.
How exactly does Coupay work? Coupay reward users of social networks for their social equity. If users share a deal, retailer or product from Coupay, and a sale occurs as a result of that referral, Coupay will reward that user financially. The model repackages affiliate marketing and adopts the CPA model, where Coupay shares the commissions from retailers with its users for ever successful referrals.
The website was launched back on 23rd August 2013 for US customers, and will be made available for Southeast Asia consumers “in the months” ahead. While no official date has been provided for the roll out in Southeast Asia, Coupay has mentioned that they will open an office in Singapore during the first quarter of 2014.
Since launch, Coupay has signed up over 1,400 retailers, featuring over 3,000 coupons and over 10 million products on its platform. To date, the company has had over 1,000 members signed up since its launch. Although all 1,400 of Coupay’s retailers are US-based, more than 200 of them are able to ship internationally to users outside of the United States.
When asked what is the revenue split between Coupay and its users, the company is unable to reveal any details, but instead shared that they currently have US$1000 ready to be claimed as cashback by their customers. Customers with over US$25 in their Coupay account can withdraw their funds directly to their Paypal or bank account.
Will the model work?
Similar models in the past has failed to scale because social network sites such as Facebook will quickly shut down their API access to companies who rewards users to share an item on Facebook. This is because it violates the advertising and promotion activities policy of Facebook.
Two Singapore startups previously tried similar models: GushCloud as well as ChurpChurp, where they reward users with monetary rewards for sharing about brands. However, Facebook shut down its access to both companies, possibly due to advertising policy infringement.
According to Facebook’s advertising guideline,
“Ads may not promote a business model or practice that is deemed by Facebook in its sole discretion to be unacceptable or contrary to Facebook’s overall advertising philosophy or to any applicable law, including but not limited to multi-level marketing schemes, or advertisements for scams.”
Commenting on that, co-founder Lucas McEntee assured that Coupay strictly prohibits spam. He shared that,
“Coupay is in the business of offering great coupons and cashback to our members from thousands of retailer. On top of that we reward users financially for real world sharing and experiences. To ensure members do not spam social networks they are only rewarded for sales that take place from their shares, posts or tweets. We believe that the Social equity of a social network user is theirs, it’s their online reputation. The other businesses you mentioned seem to reward users for posts regardless of an action taking place. Spamming is strictly forbidden under our Terms and Conditions.”
The response sounds the similar to both GushCloud and ChurpChurp: rewarding its users with monetary rewards for sharing about brands, except that Coupay only rewards users for successful sales referrals.